How to calculate annual leave allowance

It doesn’t matter how much an employee enjoys their job or how much they're committed to their work, everyone needs an extended break from time to time to recharge their batteries and indulge in some downtime.

Like all good employers should know, granting workers decent holiday allowance is key to making them feel valued, helping their wellbeing, and boosting productivity and performance.

We shouldn’t live in an age where employees fear to take annual leave. Time off is brilliant and should be encouraged for everyone.

Here’s a handy guide for companies and workers on how to calculate annual leave and find out what everyone’s entitled to.

Know your rights

If you’re employed in the UK and work five days a week, you should receive a bare minimum of 28 days paid annual leave. In other words, you are entitled by law every year to 5.6 weeks of paid holiday. In some workplaces this includes public and bank holidays, in others it doesn’t.

Some employers might provide more than the minimum 28 days holiday allowance as part of their benefits package or agreements with individual workers. It's common that longer-serving company members get higher amounts of leave - eg. 1 extra day of leave per year worked, up to a reasonable maximum.

Remember, statutory paid annual leave is limited by law to a minimum of 28 days, and an employer is not legally obliged to award any extra, even if an employee works six days a week.

Part-time perks

Part-time workers should be treated no differently to full-time employees and are also entitled to 5.6 weeks of annual leave, but on a pro-rata basis. For example, if a part-timer worked two days a week, you would calculate their annual leave by multiplying those two days by 5.6 weeks, which would give you a holiday allowance of 11.2 days.

Likewise, three days a week multiplied by 5.6 would be 16.8 days annual leave allowance a year. Agency workers are not exempt from these rules and must also be allowed to take paid holidays.

White sands
Photo by Toa Heftiba / Unsplash

Do public and bank holidays count?

At the company’s discretion, paid bank and public holidays can count towards an employee’s minimum holiday entitlement. Some workers are given public and bank holidays in addition to their 28 days paid annual holiday allowance. It’s also worth noting that requiring an employee to work on a bank holiday does not automatically entitle an employee to an enhanced pay rate.

What about unpaid leave?

An employee has no legal entitlement to unpaid leave, but an employer may choose to grant a period of unpaid leave if they feel personal circumstances and needs dictate it. During maternity, paternity, adoption leave, and absences caused by illness, an employee’s holiday entitlement will accrue just as if they were working.

Resolving disputes

Everyone needs a holiday and companies have a duty of care to make sure every member of their workforce gets decent time out from the busy workplace. If an someone's not given their legal holiday entitlement, then their first course of action should be to speak to their employer. If a resolution can't be agreed, it might be wise for them to contact a trade union rep.

How to calculate holiday allowance: things to remember

As soon as someone starts work, they begin to accrue annual holiday allowance. An employee who is entitled to 28 days leave a year and should be paid the same wage while on holiday as when they are in work.

Surprisingly, not everyone thinks to take their full allowance of leave. If you're a manager and you see someone failing to take advantage of their allowance, you should encourage them to do so. A company culture that encourages proper resting habits is going to have happier, more productive staff.

An employer can decide when an employee is allowed to take a holiday, but they must allow them the minimum amount of days off they're entitled to. When an employee’s contract of employment is terminated, they are entitled to payment for any annual leave allowance not taken.

Both employers and employees would do well to remember these rules and abide by them. That way, both companies and workers can ensure every holiday is a happy one.